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Immobility Of Economic Mobility; Or Running To Stay In Place

It’s hard to find well-informed and insightful discussions about certain hot-button issues. This is particularly true for issues related to economics for wealth represents power.

Poverty, inequality and mobility all speak to how power is shared or monopolized. They also relate to how education, knowledge and the media are controlled and who controls them. Discussion is difficult because the system silences or disregards most of those impacted by what is being discussed or whitewashed. When the upper class elites (political, media and academic) begin talking about the lower classes, you should immediately look for the potential spin and the too often lack of probing depth of analysis.

President Obama and the Democrats have decided “income inequality” is the major domestic issue confronting Americans. But a new study by liberal economists challenges many of the president’s and his political allies’ assumptions about the growing gap between rich and poor.

Well, not really. When you look at various data, the so-called assumptions aren’t the problem.

“We find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s,” write the economists. Comparing their results with earlier studies covering 1950 to 1970, they also find little difference. Social mobility “remained remarkably stable over the second half of the twentieth century in the United States,” the study says.

Something is strange about this data. There is a disconnect. As even the authors of the paper noted:

Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the “birth lottery” – the parents to whom a child is born – are larger today than in the past

The middle class had been continuously growing until 1974. Since then, the middle class has been disappearing, the middle class that bridges the gap between the poor and rich.

All this study is saying is that most Americans today are at least as bad off as they were decades ago. Most Americans, generation after generation, are on average stuck in their class position, no more likely to rise or fall than before.

Even so: job security and good benefits are becoming a rarity, wages are stagnating, inflation is growing, buying power is shrinking, costs of living are getting more expensive (especially medical bills), costs of college put kids in debt before they even graduate, debt in general is overwhelming many people, bankruptcy is becoming common, families are losing their homes and life savings, small businesses are having a harder time competing against big biz, and much more could be added. But because of public assistance programs most Americans are managing to not completely go under.

Basically, the economy is doing worse for most Americans and only the government is artificially keeping the whole system from crashing down.

Meanwhile, the rich are getting richer. Average economic mobility is staying about the same, but the rich are moving up into the stratosphere. Of course, the 1% is the 1% even as that entire 1% moves further away from the 99%.

“The findings also suggest that who your parents are and how much they earn is more consequential for American youths today than ever before,” The Washington Post’s Jim Tankersley writes. “That’s because the difference between the bottom and the top of the economic ladder has grown much more stark, but climbing the ladder hasn’t gotten any easier.”

A paper from Stanford University, “State of the Union: The Poverty and Inequality Report 2014,” synthesizes economic data and academic research to paint a full picture — a “unified analysis” — of key indicators of the nation’s economic health that may not receive the same visibility as GDP, aggregate growth patterns or stock market trends. Produced by the Stanford Center on Poverty and Inequality, which receives some federal funding, the report enlisted subject-area academic experts on issues such as the labor market, health, education and income trends. Overall, the data suggest a “broadly deteriorating poverty and inequality landscape.”

To return to the data of the NBER paper, The Equality of Opportunity Project summarized some of the details:

Is America the “Land of Opportunity”? In two recent studies, we find that: (1) Upward income mobility varies substantially within the U.S. Areas with greater mobility tend to have five characteristics: less segregation, less income inequality, better schools, greater social capital, and more stable families. (2) Contrary to popular perception, economic mobility has not changed significantly over time; however, it is consistently lower in the U.S. than in most developed countries.

All of that is obvious.

People who are well off live in better conditions and are able to maintain those better conditions across generations. They have the money to fund their schools and libraries. They have a ton of social capital and the basic privileges of a middle-to-upper-class lifestyle. Their lives are less stressful, their marriages are less stressed, and they have more free time to spend with their kids. They have the wealth and they have the connections and opportunities to use that wealth to offer their children a very rosy future.

The researchers delved deeper to see what might explain these variations. They found that areas with large populations of African-Americans had lower mobility. What was surprising was that whites who lived in those communities with large African-American presences also experienced lower rates of upward mobility.

The study also found that areas with less urban sprawl had higher intergenerational mobility, and where there was substantial racial and economic de facto segregation, mobility decreased. The strength of social networks — as measured by participation in civic or religious groups, for example — also correlated with mobility. “High upward-mobility areas tend to have higher fractions of religious individuals and greater participation in local civic organizations,” the study’s authors write.

Exactly. Not everything is about race. It has to do with structural classism and the enduring neighborhood effect. But then the article veers off into typical nonsense. As the author explains in her great wisdom, jumping from correlation to causation:

But the most important finding is one that most conservatives won’t be surprised at and many liberals would rather ignore: “The fraction of children living in single-parent households is the strongest correlate of upward income mobility among all the variables we explored.” The more single-parent households in the area, the lower the mobility.

And, as with race, the correlation holds even for those who don’t fit the category. Children from intact families experience lower mobility rates if they live in areas with large numbers of single-parent households.

This is the danger of a little bit of knowledge. It can lead to narrow analyses and simplistic conclusions. The problem in this case was the author wasn’t even sure what she was concluding. If the family is so important, how does the larger social environment trump the direct family influence?

In The Nurture Assumption, Judith Rich Harris tackles this assumption that all or most of the blame can be put on families. She even takes on the race angle (p. 240):

I mentioned a study of African -American kids from “high risk” families —no fathers, low incomes. The ones who lived in low-income neighborhoods were more aggressive than their middle-class counterparts; aggressive behavior was the norm where they lived. But the ones who lived in mostly white, middle-class neighborhoods were not particularly aggressive. These black kids from fatherless, low-income homes were “comparable in their level of aggression” to the white, middle-class kids they went to school with. They had adopted the behavioral norms of the majority of their peers.

So, it goes both ways. Social environment trumps family conditions in all scenarios. Peer influence, in particular, is very powerful. That supports the liberal position, contrary to Chavez’s claim.

As Harris explains in detail, there are a lot of complex factors involved (pp. 285-287):

When the biological father is living but not living with his kids, you have a family situation that is statistically associated with unfavorable outcomes for the kids. Let me show you how it might be possible to account for the unfavorable outcomes without reference to the children’s experiences in the home or to the quality of parenting they receive there.

Most single mothers are nothing like Murphy Brown: most of them are poor. Half of all homes headed by women are below the poverty level. Divorce usually leads to a drastic decline in a family’s standard of living— that is, in the standard of living of the ex-wife and the children in her custody. 22

The loss of income impacts the kids in several ways. For one thing, it can affect their status in the peer group. Being deprived of luxuries such as expensive clothing and sporting equipment, dermatologists and orthodontists, can lower kids’ standing among their peers. 23 Money is also going to play a role in whether the kids can think about going to college. If it’s out of the question, then they may be less motivated to graduate from high school and to avoid getting pregnant.

But by far the most important thing that money can do for kids is to determine the neighborhood they grow up in and the school they attend. Most single mothers cannot afford to rear their children in the kind of neighborhood where my husband and I reared ours —the kind where almost all the kids graduate from high school and hardly any have babies. Poverty forces many single mothers to rear their children in neighborhoods where there are many other single mothers and where there are high rates of unemployment, school dropout, teen pregnancy, and crime. 24

Why do so many kids in these neighborhoods drop out, get pregnant, and commit crimes ? Is it because they don’t have fathers? That is a popular explanation, but I considered the question in Chapter 9 and came to other conclusions. Neighborhoods have different cultures and the cultures tend to be self-perpetuating; they are passed down from the parents’ peer group to the children’s peer group. The medium through which the cultures are passed down cannot be the family, because if you pluck the family out of the neighborhood and plunk it down somewhere else, the children’s behavior will change to conform with that of their peers in their new neighborhood.

It’s the neighborhood, not the family. If you look at kids within a given neighborhood, the presence or absence of a father doesn’t make much difference. Researchers collected data on 254 African-American teenage boys from an inner city in the northeast United States . Most of the boys lived in households headed by a single mother; others lived with both biological parents, a mother and a stepfather, or in other kinds of family arrangements. Here are the researchers’ conclusions:

“Adolescent males in this sample who lived in single-mother households did not differ from youth living in other family constellations in their alcohol and substance use, delinquency, school dropout, or psychological distress.” 25

Within an economically disadvantaged inner-city neighborhood, the kids who live with both parents are no better off than those who live with only one. 26 But within a neighborhood like this, the majority of families are headed by single mothers, because mothers with partners generally can afford to live somewhere else. The higher income of a family that includes an adult male means that kids with two parents are more likely to live in a neighborhood with a middle -class culture and, therefore, more likely to conform to middle-class norms.

This all shows how important class is. Also, it shows how upward and downward mobility relate to class influences. But I don’t want to leave this issue without tying it more closely to race. Much of this has nothing to do with race, but much of it has everything to do with race.

“Specifically, African Americans are much more likely than whites to be stuck at the bottom of the income ladder over a generation, and also at the bottom of the wealth ladder,” she said. They’re also more likely to fall from the middle. [ . . . ]

“It is the case that African-American families manage to get to the middle class and they have some sense of economic security, but their ability to pass that on to their kids is not as high as the white families,” she said.

As the author continues, she points out how racial segregation can trump even class influence:

And while this particular study didn’t delve into specific reasons for this gap, Currier pointed to previous research showing the impact neighborhood poverty has had on maintaining wealth disparities over time. “Two thirds of African-American children born between 1985 and 2000 are being raised in high poverty neighborhoods,” compared to just six percent of white children, Currier noted, proportions that haven’t shifted much over the last 30 years. “It isn’t the case that two thirds of African-American families are poor, but a lot of even middle-class African-American families are living in high poverty neighborhoods and research shows that, that environment in childhood increases a person’s chance of downward mobility by 52 percent,” she added.

Interestingly, the author then brings up yet another NBER paper which seems to be a necessary corollary to the other one:

It turns out that the actual data shows a much more dire picture than some of those writing on the subject would suggest.

Simply stating the fact that economic mobility by some measures hasn’t decreased isn’t to say most Americans are doing well. It isn’t even to imply that economic mobility comes even close to being a realistic hope for many Americans. If you are poor and especially if you are a poor minority in a poor minority neighborhood, you are shit out of luck. For these people, it’s a constant struggle, running just to stay in place.